Cable is the market nickname for the pound against the US dollar, written as GBP/USD. It states how many US dollars one British pound buys. If cable climbs from 1.2500 to 1.2600, the pound has strengthened versus the dollar. If it falls, the pound has weakened.
Traders use cable to refer to the spot rate and to derivatives that track it, such as futures and options. Quotes usually display four or five decimals. A pip is the fourth decimal place, so 0.0001.
Why it is called cable, and how the quote works
The name dates back to the 19th century when a telegraph cable under the Atlantic linked London with New York. Banks used that line to send exchange rates and orders between the two financial centres. The nickname stuck for GBP/USD.
GBP/USD is a direct quote in dollars per pound. A price of 1.2735 means one pound buys 1.2735 dollars. In most retail platforms the pound is the base currency, so the pair shows what a single pound is worth in dollars. Some data services also show the inverse, USD/GBP, which would be 1 divided by the GBP/USD rate. Be clear which way round you are looking, because a rise in GBP/USD is a fall in USD/GBP.
Quotes may include a fifth decimal known as a pipette (one tenth of a pip). Market depth and the spread between the bid and the ask will vary by time of day and venue.
What tends to move cable
Cable responds to anything that changes the relative outlook for the UK and US economies or interest rates. Common drivers include:
- Interest rate expectations for the Bank of England versus the Federal Reserve, often visible in short-dated yields.
- Economic data such as inflation, wages, jobs, retail sales and GDP from either side of the Atlantic.
- Official speeches or policy decisions from central bankers.
- Risk sentiment. In periods when investors seek safety, the dollar often gains, which can weigh on GBP/USD.
- UK or US fiscal news, trade headlines and political events that alter growth or inflation expectations.
- Capital flows, for example cross-border mergers or large portfolio rebalancing.
Liquidity is usually deepest during the London and New York trading day, with the overlap between those sessions often bringing the tightest spreads and the most price action. Around major data releases the pair can move quickly and spreads can widen.
How people trade GBP/USD in practice
Professional dealers mostly trade cable in the over-the-counter spot market via banks and electronic venues. Many individuals access it through a regulated broker that offers margin-based FX, contracts for difference or spread bets. Some trade listed derivatives instead, such as pound futures on major exchanges and options on those futures. Exact contract sizes, margining and product features vary by provider.
The market runs 24 hours a day from Monday to Friday, rolling through Asia, Europe and North America. Order types are standard for liquid FX pairs, including market, limit and stop orders. Slippage can occur around fast moves or thin liquidity, so traders often manage risk with predefined position sizes and stop-loss levels.
Transaction costs combine the spread and any commissions or financing. If you hold positions overnight in leveraged products, you may pay or receive a swap or funding adjustment that reflects the interest rate differential plus a provider’s charge. The calculation method and timing differ by platform.
Reading a cable quote and basic P&L maths
Because GBP/USD is quoted in dollars per pound, price changes are naturally in dollars. A one pip move is 0.0001. For a position of 100,000 pounds, one pip is typically worth 10 US dollars. For 10,000 pounds, one pip is about 1 US dollar. Providers may show these as standard, mini and micro lot sizes.
Example: you buy 100,000 GBP/USD at 1.2550 and later sell at 1.2585. That is a 35 pip rise. The approximate profit is 35 pips × 10 dollars per pip, which is 350 dollars before costs. If your trading account is in pounds, the platform will convert that dollar P&L back into sterling at the prevailing rate. Exact conversion and reporting differ by provider.
If you sell first and buy back lower, the same pip values apply, only the direction is reversed. Always check how your platform handles position sizing, pip values and currency conversions, as implementations are not identical across firms.
Jargon and common mix ups
Traders often say sterling when they mean the British currency in general. Cable refers specifically to the pound against the US dollar. GBP can be quoted against many other currencies, such as GBP/JPY or EUR/GBP, but those are not cable. You may hear nicknames for other pairs, for example loonie for USD/CAD or kiwi for NZD/USD, though usage varies by desk.
Because GBP/USD is usually quoted with the pound first, a rising number means a stronger pound and a weaker dollar. If you encounter USD/GBP, the meaning flips. Keeping track of which currency is the base avoids confusion when reading moves and calculating P&L.
Risks when trading cable
GBP/USD can be volatile around scheduled data, surprise headlines and central bank decisions. Spreads can widen and orders may fill at worse levels than expected. Weekend gaps can also occur between Friday’s close and Monday’s open. Leveraged products amplify both gains and losses, and funding charges can add up if you hold for long periods.
Tax treatment, product availability and protections depend on your country and the specific platform you use, and rules can change. Always review product disclosures and the way your broker handles pricing, margin and rollover before you trade.